Choosing between a fixed and variable interest rate is the most consequential decision a New Zealand homeowner will make, directly impacting monthly cash flow and long-term interest costs. In the current 2026 economic environment, the Reserve Bank of New Zealand (RBNZ) has stabilized the Official Cash Rate (OCR) at 2.25% after a series of aggressive cuts, bringing mortgage rates down to a "new normal" range of 5.00% to 5.50%. While fixed-rate mortgages offer budget certainty and protection against sudden market spikes, variable (floating) rates provide the ultimate flexibility for debt reduction through lump-sum repayments and offset facilities. This guide analyzes the mechanics of both structures, explores hybrid "split-rate" strategies, and details the specific tools like revolving credit and offset accounts that can shave years off your mortgage. By understanding the interplay between RBNZ policy, bank "special" rates, and your personal risk tolerance, you can navigate the 2026 property market with financial confidence.
Understanding the Fixed-Rate Mortgage in New Zealand
The fixed-rate mortgage is the cornerstone of the New Zealand housing market, favored by those who prioritize financial predictability and "peace of mind". When you choose a fixed rate, you lock in a specific interest percentage for a set term, typically ranging from six months to five years. During this period, your required repayments remain constant, shielding you from any increases in the Official Cash Rate or commercial bank rate hikes. In 2026, many Kiwis are opting for one- to two-year fixed terms to balance current savings with the ability to reassess their strategy as the economic recovery gains momentum. However, this stability comes with a trade-off: fixed loans offer limited flexibility for making extra repayments and often carry significant "break fees" if you decide to sell your home or refinance before the term expires.
- Budget Certainty: You know exactly how much will leave your bank account every fortnight or month, making long-term planning easier.
- Rate Protection: If the RBNZ surprises the market with a rate hike, your fixed rate remains untouched until the end of the term.
- Market Specials: Banks often reserve their most competitive "special" rates for fixed-term loans with at least 20% equity.
- Limited Repayments: Most lenders restrict extra payments to a small percentage (e.g., 5% per year) of the original loan balance.
Budget Certainty: You know exactly how much will leave your bank account every fortnight or month, making long-term planning easier.
Rate Protection: If the RBNZ surprises the market with a rate hike, your fixed rate remains untouched until the end of the term.
Market Specials: Banks often reserve their most competitive "special" rates for fixed-term loans with at least 20% equity.
Limited Repayments: Most lenders restrict extra payments to a small percentage (e.g., 5% per year) of the original loan balance.
The Mechanics of Fixing Your Rate in 2026
It is a common misconception that the rate you see during your application is the rate you will receive on moving day. In New Zealand, the applicable fixed rate is determined on the day of settlement unless you pay a "Rate Lock Fee" to guarantee the current offer. As of early 2026, with the OCR holding steady at 2.25%, the spread between 1-year and 5-year fixed rates has narrowed, leading many borrowers to seek advice on whether to "lock in" for longer or stay short-term to capture potential future dips.
| Term Length | 2026 Market Outlook | Best For |
| 6 Months – 1 Year | Captures short-term rate drops | Borrowers expecting to sell soon |
| 18 Months – 2 Years | The “sweet spot” for 2026 stability | First-home buyers on a standard budget |
| 3 – 5 Years | Long-term insurance against inflation | Investors seeking set-and-forget costs |
Practical Example: The Certainty of Fixed Costs
Imagine an Auckland couple with a $700,000 mortgage. By fixing for two years at 5.50%, they guarantee a fortnightly repayment of roughly $1,834. Even if global economic factors cause the RBNZ to raise rates in late 2026, their cost remains unchanged for the full 24 months, allowing them to save for renovations or childcare with total confidence in their housing costs.
The Flexibility of Variable and Floating Rate Mortgages
Variable rate mortgages, often referred to as "floating" rates in New Zealand, offer a dynamic alternative to the rigid structure of fixed terms. These rates are linked to market conditions and the RBNZ's policy shifts, meaning they can—and will—fluctuate over the life of the loan. The primary allure of a floating rate is the total absence of early repayment penalties; you can pay off as much as you like, whenever you like. This makes them an ideal choice for individuals with irregular income, such as the self-employed, or those expecting a lump sum from a bonus or inheritance. While floating rates have historically been higher than their fixed counterparts, they provide access to powerful interest-saving tools like offset accounts and revolving credit facilities.
- Unlimited Extra Payments: Every dollar paid above the minimum goes directly toward reducing the principal, saving you thousands in interest over time.
- No Break Fees: You can sell your house, switch lenders, or pay the loan in full at any time without a "penalty" fee.
- Capture Rate Dips: If the bank cuts its floating rate, your repayments (or the interest component) decrease immediately.
- Access to Offset: Use your transaction and savings balances to "cancel out" the interest on an equivalent portion of your mortgage.
Unlimited Extra Payments: Every dollar paid above the minimum goes directly toward reducing the principal, saving you thousands in interest over time.
No Break Fees: You can sell your house, switch lenders, or pay the loan in full at any time without a "penalty" fee.
Capture Rate Dips: If the bank cuts its floating rate, your repayments (or the interest component) decrease immediately.
Access to Offset: Use your transaction and savings balances to "cancel out" the interest on an equivalent portion of your mortgage.
Managing the Risk of Fluctuating Repayments
The "risk" in a variable loan is that your budget must be flexible enough to absorb rate increases. In early 2026, while the consensus is for OCR stability, any unexpected jump in inflation could force banks to raise their floating rates with as little as 30 days' notice. For this reason, many lenders stress-test floating rate applications at a "buffer rate" significantly higher than the current market offer to ensure borrowers can weather a sudden spike in costs.
| Feature | Variable (Floating) Mortgage | Impact on Borrower |
| Rate Adjustment | Changes with market/OCR | Repayments can rise or fall |
| Redraw Facility | Access extra payments made | Acts as an emergency fund |
| Application Fees | Often higher than fixed | Up to $500 for revolving credit |
| Interest Calculation | Calculated daily | Rewarding for daily money management |
Example: Using Flexibility to Beat Debt
A self-employed contractor in Wellington keeps $50,000 of their $500,000 mortgage on a floating rate. During a high-earning quarter, they pay an extra $10,000 into that floating portion. Because there are no break fees, they instantly reduce their interest-bearing debt to $490,000, potentially saving over $15,000 in interest over the remaining life of the loan without being locked into a higher fixed repayment.
The Hybrid Approach: Splitting Your Home Loan
For many New Zealanders, the "Fixed vs Variable" debate ends in a compromise: the split-rate mortgage. This strategy involves dividing your total debt into multiple portions, with the majority (e.g., 80%) on a fixed term for security and a smaller portion (e.g., 20%) on a variable or revolving credit facility for flexibility. This "best of both worlds" approach is particularly popular among first-home buyers in 2026 who want the protection of a fixed rate but still want to use their monthly surplus to chip away at their principal. By "laddering" your fixed portions—fixing half for one year and half for three years—you also ensure that you aren't forced to re-fix your entire debt at a single point in time, mitigating the risk of a "rate shock" if the market is high when your term expires.
- Tailored Stability: You can choose exactly how much of your income is "protected" by a fixed rate.
- Debt Reduction Target: Set your floating portion to an amount you realistically expect to pay off within 12–24 months.
- Risk Diversification: Laddering terms protects against re-fixing during a temporary market peak.
- Accessibility: Keep your "emergency fund" in an offset account linked to the floating portion.
Tailored Stability: You can choose exactly how much of your income is "protected" by a fixed rate.
Debt Reduction Target: Set your floating portion to an amount you realistically expect to pay off within 12–24 months.
Risk Diversification: Laddering terms protects against re-fixing during a temporary market peak.
Accessibility: Keep your "emergency fund" in an offset account linked to the floating portion.
Deciding on the Right Split Ratio
There is no one-size-fits-all ratio for splitting a loan; it depends entirely on your financial discipline and future plans. Conservative borrowers might fix 90% of their debt, whereas aggressive debt-reducers might keep 30% or 40% on a floating rate to maximize the impact of their savings. In a 2026 environment of modest house price growth, focusing on equity growth through aggressive principal repayment is a key strategy for Auckland and Christchurch homeowners.
| Split Strategy | Portion Fixed | Portion Floating | Best For |
| The “Safety First” | 90% | 10% | Young families with tight budgets |
| The “Active Payer” | 70% | 30% | Professionals with high surplus cash |
| The “Investment Split” | 100% | 0% | Landlords seeking tax-certainty |
| The “Ladder” | 50% (1yr) / 40% (3yr) | 10% | Most 2026 first-home buyers |
Example: The "Ladder" Strategy in Action
A borrower in Hamilton splits their $600,000 loan: $300,000 is fixed for 12 months, $250,000 is fixed for 3 years, and $50,000 is on a floating revolving credit. When the 12-month term expires in early 2027, they only have to negotiate a new rate for half of their debt. If rates have dropped, they win; if rates have risen, the other $250,000 remains safely "locked" at the old, lower rate.
Revolving Credit: The "Giant Overdraft" Strategy
Revolving credit is a specialized type of variable home loan that functions as a large, pre-approved overdraft. Instead of having a separate mortgage account and savings account, your entire loan becomes your everyday transaction account. Your salary is paid directly into the mortgage, instantly reducing the balance on which interest is calculated daily. As you spend throughout the month, the balance increases, and you are charged interest accordingly. This tool is incredibly powerful for disciplined spenders who keep their balance as low as possible for as many days as possible, effectively using the bank's money to pay for daily life while their own money sits against the mortgage principal.
- Daily Interest Savings: Interest is calculated on the closing balance each day; every dollar counts.
- No Set Repayments: Unlike a standard loan, you often only need to pay the interest, allowing for total flexibility.
- Redraw Power: You can withdraw funds up to your approved credit limit at any time without asking the bank.
- Consolidated Finance: Combines your mortgage, savings, and income into one stream.
Daily Interest Savings: Interest is calculated on the closing balance each day; every dollar counts.
No Set Repayments: Unlike a standard loan, you often only need to pay the interest, allowing for total flexibility.
Redraw Power: You can withdraw funds up to your approved credit limit at any time without asking the bank.
Consolidated Finance: Combines your mortgage, savings, and income into one stream.
The Risks of "Treating Your Home Like an ATM"
The biggest drawback of revolving credit is the requirement for extreme financial discipline. Because there is no "forced" principal repayment schedule, it is easy to spend up to your limit and never actually pay off the house. Many banks now offer "reducing limit" revolving credit facilities, where the total limit of the overdraft automatically drops by a set amount each month, essentially forcing you to pay down the debt over time.
| Feature | Impact on Discipline | Recommendation |
| No Fixed Repayments | Temptation to spend | Only for “A-type” budgeters |
| Reusable Credit | Easy access to funds | Use for emergencies, not luxury |
| Transaction Fees | Can add up monthly | Monitor account usage closely |
| Interest Rate | Usually the floating rate | Check for “special” revolving rates |
Example: The Salary-In Strategy
A nurse in Dunedin has a $50,000 revolving credit portion. Their $6,000 monthly salary is paid into this account on the 1st of the month. Their mortgage interest is calculated on $44,000 for most of the month until their bills are paid on the 20th. By keeping that $6,000 "sitting" on the mortgage for 20 days every month, they save hundreds in interest annually compared to having that money in a standard zero-interest checking account.
Offset Mortgages: Saving Interest with Your Savings
Offset mortgages offer a similar interest-saving benefit to revolving credit but allow you to keep your savings in separate accounts. This is often the preferred choice for couples who want to keep their individual savings "buckets" while still helping to pay off the joint mortgage faster. You can link up to eight different transaction and savings accounts (including those belonging to your children or a business) to your offset mortgage portion. The total balance of these accounts is subtracted from your loan balance before the bank calculates your interest. For example, if you have a $100,000 offset loan and $20,000 in savings, you only pay interest on $80,000.
- Tax Efficiency: You don't earn interest on your savings (so you don't pay RWT), but you save interest on your mortgage at a higher rate.
- Separation of Funds: Unlike revolving credit, your savings aren't "lost" in the mortgage balance.
- Full Accessibility: You can withdraw your savings instantly; your mortgage interest will simply adjust upward.
- Family Help: Some banks allow parents to link their savings to a child's offset loan to help them pay it off faster.
Tax Efficiency: You don't earn interest on your savings (so you don't pay RWT), but you save interest on your mortgage at a higher rate.
Separation of Funds: Unlike revolving credit, your savings aren't "lost" in the mortgage balance.
Full Accessibility: You can withdraw your savings instantly; your mortgage interest will simply adjust upward.
Family Help: Some banks allow parents to link their savings to a child's offset loan to help them pay it off faster.
Maximizing the "Net Balance" Advantage
The secret to a successful offset strategy is keeping as much cash as possible in the linked accounts. Many homeowners use their offset accounts for their emergency fund, tax provisions (if self-employed), and even their holiday savings. Because the "return" on an offset account is effectively the mortgage interest rate (around 5.5% in 2026) tax-free, it is almost always more beneficial than keeping money in a standard term deposit or savings account.
| Account Type | Mortgage Interest Rate | Savings Interest Rate | Net Benefit |
| Standard Savings | 5.50% (Paid) | 3.00% (Earned) | -2.50% loss |
| Offset Account | 5.50% (Saved) | 0.00% (Earned) | 5.50% gain (tax-free) |
Example: The "Bucket" Saver
A Christchurch couple uses the "bucket" method for their finances. They have four accounts: "Daily Spending," "Emergency Fund," "Holiday," and "Car Maintenance." By linking all four to their $80,000 offset portion, their combined balance of $15,000 reduces the interest-bearing debt to $65,000. They retain the psychological comfort of their separate savings goals while achieving maximum interest efficiency.
The Hidden Cost: Understanding Mortgage Break Fees
One of the most significant risks of a fixed-rate mortgage is the "Early Repayment Adjustment," commonly known as a break fee. This is a penalty charged by the lender if you pay off the loan balance, refinance with a different bank, or switch to a lower rate before your fixed term has ended. The fee is designed to compensate the bank for the financial loss it incurs on its own "hedging" arrangements—the money the bank borrowed on the wholesale market to lend to you at a fixed rate. In a 2026 environment where interest rates have fallen from 2023 peaks, break fees can be particularly high because the bank stands to lose the difference between your "high" fixed rate and the "low" current market rate.
- How it's Calculated: Based on the loan size, the time remaining on the term, and the difference between your rate and current market rates.
- Market Sensitivity: Fees are typically higher when interest rates are falling.
- Portability Options: Some banks allow you to "transfer" your fixed rate to a new property to avoid breaking the contract.
- Exemptions: If market rates are higher than your fixed rate when you break, you may be charged little to no fee.
How it's Calculated: Based on the loan size, the time remaining on the term, and the difference between your rate and current market rates.
Market Sensitivity: Fees are typically higher when interest rates are falling.
Portability Options: Some banks allow you to "transfer" your fixed rate to a new property to avoid breaking the contract.
Exemptions: If market rates are higher than your fixed rate when you break, you may be charged little to no fee.
Calculating the "Benefit vs. Cost" of Breaking
If you are locked into a 7% fixed rate from 2024 and the current rate is 5.5%, you might be tempted to break and re-fix. However, the break fee is often calculated to match exactly what you would have paid in interest. For example, a $400,000 loan with one year left on a 7% rate might incur a $6,000 break fee. Unless you plan to stay in the home for several more years at the lower rate, or the "cash-back" from a new bank covers the fee, it is often better to wait for the term to expire.
| Factor | High Break Fee | Low Break Fee |
| Market Rate Trend | Falling below your fixed rate | Rising above your fixed rate |
| Time Remaining | Several years | A few months |
| Principal Amount | High balance | Low balance |
Repayment Strategies: How to Pay Off Your Mortgage Faster
Regardless of whether you choose a fixed or variable rate, the goal for most New Zealanders is to become debt-free as quickly as possible. Even in the stable rate environment of 2026, the power of compound interest means that small, early efforts yield massive long-term results. For those on fixed rates, this might mean maximizing the "extra repayment" allowance each year. For those on variable rates, it means keeping your repayments at the level they were when rates were high, rather than dropping them when the bank cuts the rate. This effectively turns every rate cut into an extra principal payment.
- Maintain Repayments: When interest rates drop, keep your payment amount the same to "accelerate" principal reduction.
- Increase Frequency: Switching from monthly to fortnightly or weekly payments can save interest by reducing the principal more frequently.
- Lump Sums: Use tax refunds or bonuses to make one-off payments directly against the principal.
- "Rounding Up": Even rounding your payment up to the nearest $50 or $100 can shave years off a 30-year term.
Maintain Repayments: When interest rates drop, keep your payment amount the same to "accelerate" principal reduction.
Increase Frequency: Switching from monthly to fortnightly or weekly payments can save interest by reducing the principal more frequently.
Lump Sums: Use tax refunds or bonuses to make one-off payments directly against the principal.
"Rounding Up": Even rounding your payment up to the nearest $50 or $100 can shave years off a 30-year term.
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The Impact of Early Repayments Over 30 Years
The difference between a "minimum only" approach and a "disciplined extra" approach is staggering. In 2026, a $600,000 mortgage at 5.5% would take 30 years to pay off at the standard rate. However, by paying an extra $200 per month from the beginning, you could save over $100,000 in interest and be mortgage-free five years earlier.
| Payment Type | Monthly Total | Interest Paid (Total) | Time to Debt-Free |
| Minimum Only | $3,407 | $626,520 | 30 Years |
| +$100 / Month | $3,507 | $565,210 | 27.5 Years |
| +$500 / Month | $3,907 | $412,850 | 21 Years |
Self-Employed and Irregular Income: The Variable Advantage
Auckland and Queenstown's large gig economies and small business sectors mean many borrowers do not have a standard "fortnightly salary". For these individuals, a 100% fixed-rate mortgage can be a trap. If your income is $15,000 one month and $4,000 the next, you need a loan structure that can breathe. Keeping a significant portion of your debt on a floating or revolving credit facility allows you to pour your business "win" into the mortgage immediately, effectively using it as an interest-free holding tank for your future tax payments.
- Flexible Minimums: Some floating products allow you to pay only interest during leaner months.
- Immediate Debt Reduction: No need to wait for a fixed term to end to pay down a large invoice payment.
- Business Buffer: Use your revolving credit limit as a source of short-term business capital if needed (at mortgage rates, not business rates).
- Offset for GST: Keep your GST and Provisional Tax in an offset account to reduce your home interest until the IRD payment is due.
Flexible Minimums: Some floating products allow you to pay only interest during leaner months.
Immediate Debt Reduction: No need to wait for a fixed term to end to pay down a large invoice payment.
Business Buffer: Use your revolving credit limit as a source of short-term business capital if needed (at mortgage rates, not business rates).
Offset for GST: Keep your GST and Provisional Tax in an offset account to reduce your home interest until the IRD payment is due.
Why Self-Employed Borrowers Face More Scrutiny
In 2026, banks are still using two years of financial accounts to verify income for the self-employed. Because variable income is seen as higher risk, lenders may be less likely to offer the lowest "special" fixed rates to small business owners. This makes the flexibility of the floating portion even more valuable, as it allows the borrower to prove their character through aggressive repayments when times are good.
| Professional Type | Best Loan Structure | Why? |
| Standard Employee | High Fixed / Low Floating | Maximizes budget certainty |
| Contractor / Freelancer | Medium Fixed / High Floating | Allows for lump-sum “wins” |
| Business Owner | Low Fixed / High Offset | Offsets tax and capital buffers |
Refinancing in 2026: When to Switch Banks
Refinancing is the process of moving your entire home loan to a new lender, often to take advantage of a better interest rate or a "cash-back" offer. In the 2026 market, banks are competing fiercely for "low-risk" borrowers (those with more than 20% equity), often offering incentives between 0.70% and 1.00% of the total loan value to switch. However, refinancing is not just about the upfront cash; it is an opportunity to completely redesign your mortgage structure—perhaps moving from a simple fixed loan to an offset or revolving credit setup as your financial situation matures.
- Cash-back Incentives: A $500,000 loan could net you a $5,000 cash payment from a new bank.
- Rate Negotiation: Use a competing offer to force your current bank to drop their rate.
- Loan Restructure: Transition to more sophisticated products like offset as your savings grow.
- Consolidation: Some borrowers use a refinance to roll high-interest car or personal loans into their mortgage at a much lower rate.
Cash-back Incentives: A $500,000 loan could net you a $5,000 cash payment from a new bank.
Rate Negotiation: Use a competing offer to force your current bank to drop their rate.
Loan Restructure: Transition to more sophisticated products like offset as your savings grow.
Consolidation: Some borrowers use a refinance to roll high-interest car or personal loans into their mortgage at a much lower rate.
The "Net Gain" Calculation for Refinancing
Before you jump ship, you must account for the costs of moving. This includes your current bank's break fees, your lawyer's fees for discharging and re-registering the mortgage (usually $1,000–$1,500), and any "cash-back clawback" if you leave your current bank before their agreed minimum period (usually 3–4 years). A mortgage broker can help you run the numbers to ensure the "net benefit" is positive.
| Action | Potential Cost | Potential Benefit |
| Break Fixed Term | $500 – $10,000+ | Lower monthly interest |
| Legal Transfer | $1,000 – $1,500 | Fresh cash-back payment |
| Switch Structure | $0 – $500 (fees) | Better debt reduction tools |
The Role of a Mortgage Broker in the Fixed vs Variable Decision
In the complex 2026 market, over 70% of New Zealand borrowers now use a mortgage broker rather than going directly to their bank branch. Brokers act as intermediaries who have access to all major banks and non-bank lenders, allowing them to provide a "whole of market" view. Their expertise is particularly valuable when deciding between fixed and variable rates, as they can explain how different products will behave under various RBNZ interest rate forecasts. Most importantly, brokers are experts in "unbankable" situations, such as low deposits or variable income, where the right structure can make the difference between an approval and a rejection.
- Expert Structuring: They help you decide the exact "split" that fits your lifestyle.
- Rate Negotiation: Brokers have the leverage to get "under-the-counter" discounts that aren't advertised.
- Ongoing Management: A good broker will contact you 60 days before your fixed rate expires to plan your next move.
- Free Service: In almost all residential cases, the bank pays the broker, meaning there is no direct cost to you.
Expert Structuring: They help you decide the exact "split" that fits your lifestyle.
Rate Negotiation: Brokers have the leverage to get "under-the-counter" discounts that aren't advertised.
Ongoing Management: A good broker will contact you 60 days before your fixed rate expires to plan your next move.
Free Service: In almost all residential cases, the bank pays the broker, meaning there is no direct cost to you.
Why Brokers Are Essential for First-Home Buyers
For first-home buyers, the mortgage process is often overwhelming. A broker acts as a project manager, coordinating with your lawyer, the real estate agent, and the bank. They can explain the nuances of Kāinga Ora schemes and ensure you don't over-fix your loan, leaving you with the flexibility you need as a new homeowner.
| Advisor Type | Range of Products | Focus Area |
| Bank Manager | One Bank’s Products | Sales and Policy Compliance |
| Mortgage Broker | All Banks / Non-Bank | Long-term Strategy and Rates |
| Financial Planner | All Investments | Holistic Wealth and Insurance |
Final Thoughts
The choice between a fixed and variable home loan in New Zealand is not a one-time event, but a strategy that should evolve with your life and the economy. In 2026, the stability of the OCR at 2.25% provides a unique opportunity for Kiwis to move away from reactive "rate chasing" and focus on sophisticated debt reduction. Whether you prioritize the absolute certainty of a fixed term or the debt-crushing power of an offset account, the most important tip is to avoid a "set and forget" mentality. By splitting your loan, utilizing daily interest savings, and working with an expert broker, you can transform your mortgage from a burden into a powerful tool for building generational wealth in Aotearoa.
Ngā Pātai Auau
Is it better to fix or float my home loan in 2026?
There is no single "best" option, but many 2026 borrowers are choosing a "split" approach—fixing the majority for 1–2 years for budget security while keeping a portion floating to make extra repayments.
What is the current "special" fixed rate in NZ?
As of January 2026, many major banks are offering one- and two-year "special" fixed rates around 5.49% to 5.69% for borrowers with at least 20% equity.
Can I make extra payments on a fixed-rate loan?
Yes, but most banks limit this to a set amount (e.g., $10,000 per year or 5% of the loan) without charging break fees. Floating portions allow for unlimited extra payments.
What is a mortgage break fee and how much is it?
A break fee is a penalty charged for ending a fixed term early. It can range from a few hundred dollars to tens of thousands, depending on the loan size and the difference between your rate and the current market rate.
How does an offset mortgage work?
An offset mortgage links your savings and transaction accounts to your loan. You only pay interest on the difference between your loan balance and your combined savings balance.
Is revolving credit the same as a floating rate?
Revolving credit uses a floating (variable) interest rate, but it functions differently. It is one large account where your income and expenses flow in and out, acting like a giant overdraft.
Should I choose a short or long fixed term right now?
In early 2026, short terms (6–18 months) are popular for those expecting further rate drops, while longer terms (3–5 years) provide security if you believe inflation will return.
What happens when my fixed rate term ends?
Your loan will automatically roll onto the bank's standard floating rate, which is usually much higher. It is essential to "refix" your loan into a new term before this happens.
Does it cost money to use a mortgage broker?
In most residential mortgage cases, brokers are free for the borrower because they are paid a commission by the bank once your loan settles.
Can I use my KiwiSaver to pay down a variable loan?
While you can't usually withdraw KiwiSaver after your initial purchase, you can use any future "second chance" withdrawals or other savings to pay down the variable portion without penalty.
